Apr 9, 2021 | Blog
Real Estate Sector Analysis in Pakistan
A country, much like a castle cannot stand proud atop pillars of sandy nothingness, as having a sturdy foundation is necessary for any form of progress. Naturally this is true for Pakistan as well, and it goes without saying that among all the pillars which form the foundation of this country, real estate may be the one that has undergone the most tests and trials of time. As can be seen through the real estate sector analysis in Pakistan.
The pillar of real estate has seen many weathers, there were many issues that came when supporting the foundation of our country’s economy. Real estate developments have slowed down since 2017 due to political turmoil and constant change in economic and financial policies. If we take a look at the developments of 2019, we see that the performance has been more dismal than the present. There were many financial, economic and political challenges that the countries faced even at that time, they slowed the progress of the real estate entirely.
The arrival of 2020, with the spreading global pandemic, made the road to success look even more difficult, but it ended up to be a good year for real estate after all. The government introduced a number of schemes that motivated the citizens towards investing in this sector. These new schemes and laws are what will be the cause of rapid progression in 2021.
But the real question that comes to mind is that where did the damage begin and what was done to make amendments? The real estate sector analysis will help us properly identify the damages first, either minute or colossal and the necessary repairs and improvements that followed along with the position of the investors, realtors, consumers, in it all.
The Discouragement of the Overseas Pakistanis
Overseas Pakistanis prefer to invest their hard-earned money in real estate,
- With the purpose of having an abode to return to.
- They want their options open, so an opportunity such as the real estate seems fitting.
- Most of the first rate housing societies in major cities like Islamabad, Karachi and Lahore have already captured their interests by the provision of the splendid lifestyle they are accustomed to.
The year of 2019 did not invite many investments from abroad. The Overseas Pakistanis have known of the issues going on through the power of social media. The economic and financial issues that arose brought with them the loss in the property sector and the lack of interest of Overseas Pakistanis to invest.
Importance of the Investments by Overseas Pakistanis
The investments of Overseas Pakistanis are crucial for the growth of Pakistan as they fall in the category of remittance. The larger the remittance, the higher the value of Pakistani Rupees will be and then it can compete against the US Dollars.
Remittance inflows can contribute remarkably to a country’s economic well-being. A study conducted by Abdul Qayyum has shown that Pakistan’s remittance inflows help in not economic growth and also in improving social conditions. Districts like Sindh, Punjab and Baluchistan, have reaped the benefits of remittances to Pakistan.
And now the real estate sector analysis in Pakistan includes a big success, Pakistani Rupee traded at the highest value in nearly one year. In August 2020, the trading was at the lowest point, the rupee posted an improvement of 71 paisa’s on 3rd March 2020, closing at PKR 157.13 to the USD in the interbank currency market. This will attract our foreign investors and Overseas Pakistanis and keep them dedicated as their attention is ours.
With new policies and developments taking place, there is another benefit set in motion for the Overseas Pakistanis. For the expats, the income tax returns have been made flexible.
Untaught Property Dealers
The real estate market has been overtaken by uneducated agents and dealers who don’t have the know-how of the world of real-estate, so they misguide people and in most cases lead to cases of frauds. There is a need for a Federal and Provincial Real Estate Authority in the country that could help protect the rights of land allotters.
The development and construction of societies by the builders must be overseen, it takes many years to complete the land consolidation process. Taking the aid of some real estate regulatory authorities to oversee the developments will strengthen the confidence of people, especially overseas Pakistanis to invest their money in this sector without having any fear of scam.
This issue has an important place in the real estate sector analysis in Pakistan as it has affected progress in its own little way. Sometimes, it’s the tiny sparks of fire that are ignored, but it is capable of setting fire to the entire foundation. To prevent this, we at Sigma Properties are at your service. We shall provide you consultancy free of greed or any bad intention that is thinkable and shall point you to the right direction.
Previous Tax Rules versus the Present
The CGT or Capital Gains Tax is a tax that the seller pays and the capital gains refer to the profit that one makes from the sale of any property. Formerly, tax on capital gains or profit earned would be charged on the basis of how long one holds one’s property. For instance, if you buy a property and sell it within three years, Capital Gains Tax rates
- For the first year would be 10% on the gain
- For the second year would be 7.5% on the gain
- For the third year would be 10% on the gain
If you chose to sell your property after three years, no further CGT would be applied. This system had a negative impact on the holding period, which is the time that an investor keeps the property for himself. The holding period had become really short and properties were bought merely for the purpose of resale.
All of this is gone. Now, the tax on capital gains will be applicable after 4 years of having kept the property with you. This new reform is in the best interest of the investors as the holding period has been made manageable for them and those who are buying property for the sake of setting it aside for years.
This has begun to strengthen the pillar of real estate in the nick of time.
The Absence of Relief Packages and Incentives
There is a dire need for incentives to keep the investors engaged with the real estate dilemma. In the previous years, there were no proper incentives offered to the interested parties, so lesser development took place.
Recently the government has provided new schemes and packages. The construction relief package is one of the main ones. The President of Pakistan has recently enacted the Tax Amendment Ordinance 2021 to facilitate the construction sector of the country. It has been effective from January 1st, 2021. The deadline for availing the government’s special construction relief package from 31st December 2020 till 30th June 2021 has been extended due to this ordinance.
Now, builders and developers can easily get their projects registered under this tax amnesty scheme, which provides them immunity from disclosing their sources of income as well as availing the fixed tax regime. The deadline for the completion of projects is now 30th September 2022, instead of 30th September 2023.
This gives the real estate sector analysis an edge as the real estate investors can now enjoy the immunity to disclose their funding sources as well as the facility of fixed tax regime because of the extended deadline. It was 30th September 2022 and now it is till 31st March 2023.
The Tight Regulations of the FBR
The Federal Board of Revenue, FBR receives information about your income, the investments you have made and real estate transactions. FBR will match up your income with the filed tax returns and if there is a disparity, they will send you a notice or they will charge you a penalty fee. They might freeze your assets too.
In the past, FBR had targeted the non-filers, those citizens who do not file a tax return by the required date. There was an imposition of a ban on non-filers buying property worth more than 5 million unless they register with the Federal Revenue Board (FBR). Apart from this, FBR’s tight regulation on non-filers’ banking transactions, and the levying of high property transfer taxes discouraged investors from putting their money into the sector in 2018-19.
The FBR has lifted these bans now and the non-filers are availing this to invest large sums of money into the real estate sector. This is greatly contributing to the success of the real estate sector which is indirectly lifting the overall economic situation as well.
Conclusion
Being a developing county, Pakistan’s real estate is facing its battles. Not all of them are lost. The real estate sector analysis in Pakistan shows interesting movement and momentum. The Pakistani Rupees’ appreciation and the falling Dollar prices is a big achievement. It may not have been due to economic strength, but it is bringing in strength of a new kind. It puts Pakistan ahead of the game, in a supreme place where the world applauds it.
The new policies and packages introduced are lifting the real estate sector too because they contain benefits for the working class and the investors as well. All of this will result in more investments from abroad and within the nation. In 2021, the industry of real estate will exceed expectations, as the Pakistan Real Estate Forecast 2021 says so as well.
Jun 18, 2022 | Blog
Impacts of Pakistan Budget 2022-23 on Real Estate Business
The new budget 2022-23 was announced and has brought about various changes in the taxation system and other economic regulations. This article will provide a detailed analysis of the budget and its implications on the real estate industry.
The biggest change in the budget is the introduction of a new property tax system. The property tax system in Pakistan is based on the concept of inheritance tax, which means that property taxes are paid only when a property is passed down from one generation to another. The budget has introduced a new property tax system called the Sales Tax System. This new system will be implemented in two phases and will apply to all properties, including agricultural land and commercial properties.
The second major change in the budget 2022-23 is the increase in income tax rates. The income tax rates have been increased from 5% to 10%, 10% to 20%, 20% to 30%, and 30% to 40%. This increase in income tax rates will have a significant impact on businesses and individuals who earn a lot of money. Overall, the Pakistan budget has introduced many changes that will have an impact on the real estate industry which are discussed below.
What are the impacts of Pakistan’s budget 2022-23 on the Real Estate Business?
The Pakistani government has unveiled its budget for the upcoming fiscal year, and it has had a significant impact on the real estate industry. The budget has proposed a number of tax changes that will have an impact on the real estate industry. For example, the government plans to increase taxes on property transactions and property ownership. This will make it more expensive for people to buy or sell property, and it could lead to a decrease in demand for real estate.
Additionally, the government is planning to reduce the amount of money that individuals can receive in tax breaks. This could lead to a decrease in demand for real estate because people may no longer be able to afford to buy or rent a property. Overall, the budget has had a negative impact on the real estate industry. It is likely that there will be a decrease in demand for property, and prices may drop as a result.
What are the Negative impacts of the Pakistan Budget 2022-23 on the Real Estate Business?
One of the major impacts of the recently passed Pakistan budget is that it has caused a decrease in the value of the real estate. This budget has decreased government spending, which in turn has led to a decrease in the value of the property. The main reason for this is that the government has decided to reduce its investment in the real estate sector. They have also decided to raise taxes on property sales, which has made buying and selling properties more expensive.
Overall, this budget has had a negative impact on the real estate business in Pakistan. It is expected to cause more job losses and a decrease in the purchasing power of people living in Pakistan.
What are the Positive impacts of Pakistan’s Budget 2022-23 on the Real Estate Business?
The positive impacts of the Pakistan budget on the real estate business are manifold.
- The budget 2022-23 has restored some confidence in the economy, which has led to an increase in sales and investment in the sector.
- It has also incentivized developers to commence work on new projects.
- It has reduced borrowing costs for real estate investors.
- It has improved the liquidity conditions in the market.
- It has increased available credit lines for real estate businesses.
- It has strengthened the banking sector, which will help to provide financing to real estate businesses.
- It has increased income tax exemption limits for individuals and companies engaged in real estate activities.
- It has introduced a new property tax regime that is more equitable and rational.
- It has standardized documentation requirements for all types of property transactions.
- Lastly, it has revamped the land registration system to make it more efficient and easier to use.
All these factors are likely to have a positive impact on real estate prices and activity in Pakistan over the medium to long term.
Where is the Industry of Pakistan Real Estate heading?
There is no dearth of real estate developers in Pakistan, but the sector is facing some tough challenges. One of the major reasons for this is the country’s weak economy, which has adversely affected both Developers and Consumers. In order to revive the Pakistani real estate sector and bring about much-needed stability, the government has been implementing various schemes and policies. Here are a few of them:
First and foremost, the government has undertaken several measures to revive the country’s faltering economy. This includes creating jobs, reducing inflation, and increasing investment in key sectors such as real estate. To support job creation in the real estate sector, the government has also liberalized various regulations. In addition, it has also provided tax breaks to developers and offered loans at low-interest rates.
When it comes to consumers, the government has tried to create an enabling environment by introducing a slew of schemes such as housing subsidies and tax breaks for home buyers. It has also increased funding for housing projects in underserved areas. In addition, it has set up special units to streamline approvals for construction projects. Apart from these measures, the government has also embarked on a number of long-term projects to improve the overall condition of the Pakistani real estate.
Pros of Investing in Real Estate Business
There are a few reasons why people should invest in the real estate business in Pakistan. First of all, the Pakistani rupee has been weakening against the US dollar for some time now, so buying property in Pakistan now is a much more affordable proposition than it was a few years ago. Secondly, property prices have been on the rise in most parts of Pakistan over the past couple of years, especially in larger cities like Karachi and Lahore. This means that there is an increasing demand for real estate properties, which is good news for investors.
However, there are some risks associated with investing in the Pakistani real estate market. Such as political instability. It can adversely affect the economy and therefore the real estate market. This is because property prices are often linked to economic indicators, so a sudden decrease in investment or activity could lead to a sharp fall in property prices. Secondly, terrorist attacks can have a negative impact on the real estate market as well. This is because many people who are interested in buying or selling properties decide to wait until after an attack has occurred before making any decisions. Finally, corruption is still a big problem in Pakistan and can lead to fraudsters trying to take advantage of unsuspecting investors.
Conclusion
The budget proposed by the Pakistani government for 2022-23 has had a significant impact on the real estate business in Pakistan. The main aim of this budget 2022-23 is to reduce the country’s debt and deficit, improve the health and education sectors, and revive investment in key industries. As a result of these aims, many important changes have been made to taxation laws, which have impacted both investors and businesses operating in the real estate sector. Furthermore, you should also know about Capital Smart City, Lahore Smart City, and Rudn Enclave.
Jul 16, 2021 | Blog
What’s The Difference Between Realtors, Real Estate Agents, Brokers, Dealers and Marketing Companies
To be part of the real estate industry, you must know about some terms commonly in use. Sometimes you can’t differentiate among many terms like Realtors, real estate agents, real estate brokers, marketing companies, and real estate dealers. Although they look similar, there is a little difference. After reading the following points, you can then differentiate them.
Realtors
A Realtor is a professional person having the membership of the concerned association. Sometimes this term mixes up with real estate agents. For becoming a realtor, you need to fulfill the following criteria. You must have a valid and active real estate license. Furthermore, you have to engage yourself in real estate transactions, and you must have to present a clear image of your past career. You must have membership of National association realtors if you want to become a realtor.
Real Estate Agents
Real estate agents are persons who assist people in buying and selling property and also in rental real estate. The agents must be highly effective communicators. They bring people who want to sell or buy their property and get their commission in percentage according to the value of the land. You can also call them real estate associates or salespersons. They do not require a proper license from the federal or provincial government.
Real estate agents serve as a bridge between buyers and sellers; between the owner of the property and the person who wants to rent the property. There is an agent on either side of the transaction. Sometimes, one agent can also fix the deal from both sides on fix rate of commission. The agents are well aware of paperwork, and before the deal, they ensure that both parties know about the requirements. The agent from the seller side is called a listing agent who sets price plans, development updates, etc., that can increase the home’s value. The agent on the buyer side is called the buyer agent, who searches for properties that match the buyer’s demands and proposal. Buyer agents deal with listing agents about the property. Both agents do their best to finish the deal and fix their commission.
Real Estate Brokers
Real estate brokers have completed their education and have received a real estate broker license. They are more advanced than real estate agents. They don’t have to depend upon others and start their own business and hire real estate agents. They are technically more capable than real estate agents. Their work is not much different from agents. They earned money taking a commission from real estate agents who work under their supervision, but they don’t have to give percentage of income to the office. Real estate brokers know more technical things and can analyze the market more efficiently. Their responsibility is to manage and supervise.
Real Estate Dealers
Real estate dealers are a bit different than the rest of the three mentioned above. Agents and brokers work for other companies or dealers, while real estate dealers are persons who own property, but their primary purpose for holding that property is reselling. Dealers don’t keep the land for the long term. Their main functions are building subdivisions or property for purpose of reselling. They can also be wholesale dealers of the property. Shortly, persons who buy and sell properties can be classified as real estate dealers for the long term. If you have a property and have given it on rent, you cannot be included in the list of real estate dealers. Even though you have had the property for a short time but you are not selling it. For becoming a dealer, you must have to buy and sell the property. However, you can keep the property for the long term, but your goal must be to earn income by selling that property.
Marketing Companies
Real estate marketing aims to attract clients to the projects and promote the proposition in order to increase real estate transactions. Marketing companies are responsible for the research, analysis, strategy, branding, advertising, and promotion of the services. Some small real estate companies can manage their marketing strategies themselves at the initial stage. However, big firms hire marketing companies to meet their goals. The companies help everyone from executives to trim level salespersons in allocating them leads regarding market trends.
Great marketing companies have a team of experts who plan technically for your firm if you hire them. Marketing companies certainly raise your real estate business. In the modern age, marketing is an essential factor of any business. So, these companies are extra necessary for running your business smoothly.
Now, this is crystal-like clear in front of you. Before, you were unaware of these terms’ overlapping with each other. Sometimes you may make a mistake to judge all the terms real estate as they are looking alike. Do you have such problems in getting the meanings? If yes, then try to clear that by clicking here.
Jul 14, 2021 | Blog
Real Estate Podcasts For New Investors in 2021
With the intention to learn new things, you should find smart ways. If you are related to the real estate sector, you must listen to podcasts. Listening to the podcast will not only enhance your knowledge but also sharpen your listening and analyzing skills. Sometimes it’s very hard for beginners to go through the thick and thin of real estate dealings. Here are the best real estate podcasts for new investors in 2021. It will help you to stand a constant real estate empire though you are new to the field. Indeed, you are in search of the best podcasts that are worthy of listening to.
1. Bigger pockets podcast
Listening to this podcast will smoothen your way towards the real estate industry. If you are beginner or have a lot of experience, the bigger pockets podcast has extra pieces of fruitful advice. From this podcast, you can learn about Brandon Turner and David Greene’s interviews that they had conducted with real estate investors.
2. One rental at a time
The podcast has the story of Michael Zuber’s journey of achieving his financial stability through investing in the real estate sector. He gives practical tips to help new investors and experienced alike. He is the host of a YouTube channel and also the author of the book with the same name. One rental at a time podcast also allows a variety of guests to share their experiences related to the real estate sector.
3. Apartment Building Investing
If you want to get rid of financial ambiguities, this podcast is for you. This will teach you how to get free in three to 5 years by investing your money in the apartment building. Michael Blank hosts this podcast who also writes regularly for the bigger pockets podcast and REI classroom. Listen to the podcast and increase your knowledge and experience in Apartment building investment.
4. Rental Rookie
Emily Du Plessis, who was an 8th-grade teacher, hosted the podcast. The podcast teaches the new investors that how to get started with property investment and rental property to lead a self-sufficient and independent life. Rental Rookie also has detailed information about Emily that how she replaced her salary as a teacher with earnings from buying and selling property.
5. Real Estate Today Radio
This podcast publishes weekly episodes of interviews and call-ins and reports from the fields. Real estate today radio podcast is produced by the National Association of REALTOR. Listen to and learn about the market of real estate. Listening to the episodes will help you know more about the industry and mortgage etc.
6. Think Realty Radio
This podcast, created for new real estate investors looking for the latest news and trends, constantly presents the best real estate investment insights and techniques in a clear manner for smart listeners. The Debt vs. Equity Debate, Thinking Multifamily, and Build It and Renters Will Come are all recent episodes.
7. Real Estate News for Investors
This real estate podcast, hosted by Kathy Fettke, CEO and Co-Founder of Real Wealth Network, is ideal for investors who want to go ahead of market crashes. Learn about market trends, the best places for single-family and multifamily rental investments, self-directed IRA investing.
8. Passive Real Estate Investing with Marco Santarelli
Marco Santarelli, the creator of Norada Real Estate Investments, tells listeners how to create long-term wealth while generating passive income. With themes like The Pros and Cons of Self-Managing Your Properties and Getting Unlimited Mortgage Loans Beyond Conventional Financing, subscribers learn how to uncover opportunities throughout the real estate market cycle.
9. Real Estate Investing Mastery
This real estate podcast will teach you how to invest in real estate with little or no money down. The podcast’s host, Joe McCall, focuses on how to leverage wholesaling and lease options to earn quick returns in the short term. An interview with the man who operates the country’s largest wholesaling firm, as well as three easy ways to make simple cash offers, are among the hot subjects.
10. Rental Income Podcast With Dan Lane
Learn how more than 200 landlords got started in real estate investing, how they developed their portfolios, and what they do to stay successful. This is the ideal real estate podcast for anyone looking to learn how to make money from rentals. How a New Investor Went from $0 to $1,100 in Rental Income, and She’s a Stay-at-Home Mom Because She Bought a Few Rentals are two recent episodes.
11. Real Crowd Podcast
From the industry’s best professionals, learn the foundations of commercial and multifamily investing. The discussions include a wide range of issues, including deal analysis, market cycles, and real estate trends. Build Your Future by Unlocking Your IRA, Incorporating Real Estate Into Your Financial Plan, and You Are Your Best Investment are all popular episodes.
12. Cash Flow Guys
Although the podcast does not always focus on real estate, cash flow is something that every real estate investor desires and needs. Listen to subjects like $288K Tax-Free, How to Find Motivated Sellers FAST, and How Landlords Go Broke to learn how to achieve wealth and financial freedom.
Conclusions
New investors in the real estate sector always face some problems but Listening to this podcast will solve both your minor and major problems. Make it your daily routine and cover your journey towards being a successful investor
Jul 9, 2021 | Blog
Ways to Start a Real Estate Business with no Money
One of the most popular inquiries we get from new real estate investors is how to get started investing in real estate with no money down or very little financial outlay. Many people think that you need a lot of money to get into real estate. Well, having more money available would surely make getting into the real estate market easier. Fortunately, beginning a real estate firm with little or no money is not impossible. Many people want to invest, but they have not saved a significant amount of money due to low earnings or high expenses. Although you should keep some cash on hand at all times, it is entirely possible to get started without a large sum of money in the bank. So let us delve into the ways to start your real estate business.
1- Purchase a Property for Resale
If you do not have any money but want to start a real estate business, you might sell property on behalf of developers. The market is constantly flooded with new housing and residential projects. To sell their properties, you must contact the developers and sign a contract. You may find these developers on the internet. You advertise and sell the developer’s properties using this technique, earning a commission on each finished contract. The commission or share varies for every project and is also determined by the type of property sold. Naturally, commissions for selling luxury houses are significantly greater than commissions for the budget of sale properties, so you may wish to focus on high-end properties as well.
2- Purchase a Home as an Investment Property
You can buy a residential property with no money down using a bank loan. You can live in it for at least a year or more, then move out and turn it into a rental property. Keep in mind that building equity through real estate investing extends to the homes you already own. Furthermore, the standards for a down payment and credit score for a primary dwelling are always less strict than those for an investment property. As a result, living in your investment properties first is a terrific strategy to avoid the higher lender lending requirements for real estate investment properties.
3- Request Seller to pay your Closing Costs
In many real estate deals, the seller will pay the buyer’s closing fees to encourage a sale. However, you’ll almost certainly have to pay the whole asking amount or close to it as a trade-off. It is appropriate if your rent covers all of your bills while also providing you with a bit of monthly cash flow. If total mortgage payment (including taxes and insurance) is equal to or larger than the rent, you can adequately charge at the full asking price, seek another deal. Rental properties should always have a positive cash flow to cover vacancies and maintenance.
4- Form a Joint Venture with an Investor
Having a real estate investor as a partner can open up doors to new possibilities for your real estate business. So, if you find a great investment property but do not have the funds to close the deal, you might be able to discover someone willing to invest money and assist you in concluding the sale. People wish to invest in real estate but do not have the time or do not want to deal with all of the administrative and managerial tasks that come with it. You can team up with such an investor to realize your ambition of owning a profitable real estate firm while the investor benefits from a hassle-free real estate investment.
Negotiate the conditions of the collaboration with the investor. These types of partnerships are suitable for dealing with rental or fix-and-flip properties. You may start your real estate firm without worrying about cash if you have good managerial and administrative skills. All you need to do is choose the perfect partner to handle your business’s financial needs.
You may also like Real Estate Sector Analysis in Pakistan.
5- Devise a Strategy for Generating Leads
Lead generation is critical to the success of any company. The real estate industry is no different. To gain more business, you need a steady flow of leads, regardless of your role in the real estate industry. Whether it’s a mortgage lender, realtor, or even a house flipper, having a lead pool is crucial for any real estate business. The percentage of leads that turn into real business deals is relatively low. Therefore, every real estate agent anticipates receiving more and more profitable tips. So, if you do not have any initial funding but still want to get into the real estate industry, becoming a lead facilitator could be an intelligent solution.
You can serve as a conduit between the buyer and eager real estate brokers and realtors. You can always start producing leads at a local level to be effective in this line. You can also utilize your contacts to see if anyone in your network or neighbourhood is looking to buy, rent, or sell a home.
The following are possible steps to take in a lead generation business:
- First, locate clients or agents who are seeking a property and compile a database of those interested.
- Then look for buyers on the internet.
- Sell your leads once you’ve identified your clients. The location and quality of a lead determine the cost of the lead.
Conclusion
The real estate sector contains a lucrative business. Even if you do not have a limited budget or no money, you can get into this line of work using the above methods. But bear in mind that entering the world of real estate is merely the first step on the road to success. Your company growth and success are mainly determined by your dedication and ability to find possibilities and act on them. Sigma Properties is here to lend you a hand in building your real estate business with no money.
You may also like Where to Invest in Pakistan Real Estate 2021.
